Tuesday, March 31, 2009

Rob Muldoon's back

The NZ Herald says NZ$1.5 billion of your money - an "investment" - which will "bring New Zealand into the 21st century" - "enable it to compete with countries such as Korea, Singapore and Hong Kong". (Ah yes the 20th century is alive in well in NZ, and which Korea are we competing with again?)

Yes, National is going to grow the state by setting up a "Crown investment company" called "Crown Fibre Investment Co" (not that it is picking technology winners of course!) to build a network, and the users will come. I said before the election that this was shades of Muldoon's Think Big.

Look at the promises behind it:
- John Key says "They will be able to watch TV comfortably and easily over their computer screens, ". OHH TV over the computer screen, now THAT will create jobs right? I mean it's not as if there isn't digital Freeview subsidised by the state, and Sky's own commercially provided satellite platform right? You need TV via broadband to.... let you watch foreign TV subsidised??
- and "they will be able to run businesses from home". Amazing. Don't believe anyone running a business from home at the moment, they LIE, you can't do it without fibre to your home!

This is despite Telecom, Vodafone and Telstra Clear, the only real network providers in the country saying that their own plans will be adequate to meet demand - no doubt noting that when the government starts setting up a rival network, it devalues their own. In other words, the government is effectively shutting out significant new PRIVATELY funded network investment.

Ask yourself how you'd feel now as Telstra Clear, having spent hundreds of millions of dollars ten or so years ago rolling out hybrid fibre-coax cable to the kerb in Wellington and Christchurch, for the state to be now using taxpayers' money to roll out a superior network? (Well frankly Telstra Clear, having called for state expropriation of Telecom's property rights SHOULD now feel some chagrine).

Ernie Newman of the Telecommunications Users Association of New Zealand (not producers mind you, and not taxpayers either) is happy as can be, having long demanded the state subsidise and regulate for the benefit of his members. He was long a chief advocate of confiscating Telecom's property rights.

So why is this happening? Does the government truly believe that subsidising a particular technology so that consumers (far more than producers) can download Youtube, music, listen to internet radio and play high definition interactive games is good for the economy, or even moral?

After all, Stuff says "Ultra-fast broadband will let people watch high-definition or three-dimensional TV online, while talking on the phone via broadband or making video phone calls. Downloading movies will become much faster."

Is that worth subsidising? Faster movie downloads??

Anyway, why wont the private sector provide if people want it (and crucially are willing to pay)?

Well when you add up:
- Government denying Telecom and Vodafone private property rights over their telecommunications networks by forcing both to sell capacity on their networks to competitors at a price set by government;
- Government likely to regard any collusion between telcos for a new fibre network to be "anti-competitive";
- The RMA allowing local authorities to prohibit new overhead wire telecommunications networks in their districts, even if there are already such networks at present.

Then you might figure out that this Muldoonist approach to telecommunications is the wrong approach, and that subsidising the entertainment of New Zealanders who want cheap fast broadband is quite simply wrong.

David Farrar is typically abandoning his usual rather liberal smaller state approach to affairs and swinging in behind Muldoonist central planning of internet infrastructure. He will enjoy fibre to the kerb, and thinks my parents and their elderly friends should be forced to pay for it.

It is Think Big for the 21st century, it is cheaper, and less ambitious, but is driven by the same cargo cult belief that it will be some sort of economic saviour.

At best, it might prove to be financially self sustaining at some point, and get enough use to not be a total disaster, but at worst it will prove to be far more expensive than predicted, will not be completed according to plan, supplant other technologies, and wont deliver cheap broadband because... quite simply, it can't make international internet backbone capacity cheaper.

UPDATE: Paul Walker at Antidismal quotes an interesting example of how private sector underinvestment occurs when it fears the risk of nationalisation.


Sally said...

I am glad I gave my votes to ACT.

National must only be thinking of the next election. Power at any cost. Is some one able to tell us what their principles are?

Talk about cutting the bureauracry but not a murmur of cutting back on the number of politicians and the baggage they carry.

Anonymous said...

An excellent comment on Broadband issues.

We are lucky to have the choice of four different providers with several enlightened young farmers able to tweak the systems to reach harder areas.

But the Boffins in Telecom are not interested!